This trend is disrupting global supply chains, damaging the multilateral trading system, undermining market confidence and threatening global economic stability. We’re starting to see the use of economic tools - such as tariffs, export controls, currency manipulation and sanctions - as means for countries to achieve strategic influence or gain an advantage over another. The EU, too, has adopted a Global Strategy (EUGS) that formally calls for strategic autonomy - the ability to pursue its own interests without being constrained by other states. The UK’s decision to leave the European Union and the shifts in US policy are just two examples of a growing inclination for countries to “decouple,” “take back control” (the slogan for the Leave campaign in the UK’s EU referendum) or “go it alone” in pursuit of narrower national interests.
#Impacts of globalization on us how to
The dialogue has shifted from how to make globalization work for everyone, to how some countries can benefit from it more than others. Several other global trends are creating a more complex and challenging policy environment: technological disruption the shift in global economic power deteriorating relations between countries and emergence of great power rivalries a slowdown in global trade the rise in global debt and financial fragility regional geopolitical tensions and increasing security concerns.Īs these trends play out, the commitment to international cooperation is fading. Growing dissatisfaction with the status quo has led to a political and social backlash against the “open international economic order,” fueling the rise of populist and nationalist parties, and weakening the political center ground. These were only exacerbated by the lingering effects of the 2008 financial crisis, which have constrained income growth for millions around the world. The protests that occurred at each WTO negotiating round in the 20 th century highlighted people’s concerns. The winners have not compensated the losers, which has led to global imbalances. Governments and businesses operated on the basis that the integration of global markets would promote political cooperation and harmonize the rules of the game around the world.īut globalization has had both positive impacts (such as growth in emerging economies and a reduction in the number of people living in extreme poverty) and negative ones (such as displacement of workers and greater income inequality). Goods, capital, data and ideas began to flow freely across borders. And the General Agreement on Tariffs and Trade (GATT), the precursor to the World Trade Organization (WTO), helped to remove barriers to international trade.
The International Monetary Fund (IMF) and World Bank were established to create a new system of global economic governance. There is much at stake, and the decisions made in the coming months and years could determine the future prosperity and security of all nations.Īt the end of the Second World War, the nations that met at Bretton Woods set a new course to unite their efforts in the pursuit of peace and economic stability and avoid a repeat of past conflicts. The challenge for all countries is not to give up entirely on globalization but to redefine it for a new generation. These include new frameworks for national and multinational cooperation, and targeted efforts to address the widely held concerns over the negative impacts of globalization and communicate the benefits better to the public. Policy-makers can set the global economy on a more durable and inclusive path by focusing on a few priorities. Yet at a time when the world faces multiple shared challenges - such as climate change, forced migration, health pandemics and technology disruption - global cooperation is needed more than ever. Several other global trends - such as rising debt, geopolitical tensions, and security concerns - are creating a more complex and challenging policy environment.Īll of this is posing a growing threat to global trade, multilateralism and the system of international cooperation that has shaped global economic policy for the last seven decades.
The “weaponization” of economic tools is disrupting the global economy, weakening investment and slowing growth. With multilateralism under threat, countries must find new ways of cooperating to pursue shared goals rather than narrow national interests.Īlthough the debate about globalization is not new, we’re at an important juncture.